Software Arts Inc., VisiCorp Settle Suits Over VisiCalc Program

The Wall Street Journal

September 18, 1984

WELLESLEY, Mass. -- Software Arts Inc. and VisiCorp said they settled out of court their respective suits concerning VisiCalc, a software program for microcomputers.

Software Arts, which created the program in 1979, will receive $500,000 from VisiCorp and also will retain the rights to the VisiCalc name. Software Arts also agreed not to use the word "visi" in future products.

VisiCorp, which took over the marketing and distribution of VisiCalc shortly after its introduction, has agreed to rename its Visi On Calc software program to Visi On Plan and not to use the word "calc" in future products.

When VisiCalc's sales began to taper off last year, VisiCorp sued Software Arts for $60 million, charging it with failure to upgrade and improve the product according to the companies' agreement. Software Arts countersued for $29 million, including a request for treble damages, charging that VisiCorp wasn't using its best efforts to sell the product.

VisiCalc, an electronic spreadsheet program devised by Daniel Bricklin, now chairman of Software Arts, is believed to be the best-selling software program, with 750,000 units sold.

The tug of war over VisiCalc has hurt both of the closely held companies, by creating confusion among distributors and customers, said Mr. Bricklin. Software Arts, which according to industry estimates had sales of about $12 million last year, laid off about half of its 125 employees this year. Sales of a newer product, TK! Solver, haven't matched the pace set by VisiCalc and are reportedly lagging behind the company's expectations. According to a former employee, the company is struggling financially and morale has been poor.

VisiCorp, with an estimated $43 million in sales last year, said revenue from VisiCalc had been "near zero" for the past several months. That company has reduced its work force and also begun concentrating on developing other products such as its FlashCalc, a simplified spreadsheet program.

Several months ago, VisiCorp asked Software Arts for $5 million in return for its use of the VisiCalc name, which VisiCorp would have continued to own, said George T. Hutton, attorney for Software Arts. Software Arts refused the offer, he said.

Some analysts believe the case shows the difficulty of duplicating the success of one software product. Other concerns, such as Lotus Development Corp., have made a reputation and a fortune on a single product, and are working on a follow-up to their success.

But others say the situation is unique because of the increasingly fractious relationship between the two companies. "VisiCorp wanted to prove its technical skills, and Software Arts wanted to prove it could market," said Jeffrey Tarter, publisher of a newsletter on the software industry, called Soft-Letter.

Mr. Hutton added, "I'm not sure what either company got out of the suit, except a lot of damage to their business."

Copyright (c) 1984, Dow Jones & Co., Inc.